Earlier this year, General Electric (NYSE:GE) pledged to increase earnings at a double-digit clip in both 2005 and 2006. For a company with a market capitalization of $360 billion and annual revenues exceeding $160 billion, it was a remarkably bold prediction and clearly separated it from some of its more conservative competitors, including 3M (NYSE:MMM), IBM (NYSE:IBM), DuPont (NYSE:DD), and United Technologies (NYSE:UTX).

So far, the Connecticut-based company has backed up its prediction with admirable results. For the second quarter, total revenue growth was 13%, and 11 of its divisions reported double-digit growth.

The big questions: Will this growth continue? Does GE continue to represent a good long-term investment?

My answer to both questions is yes -- and, if you'll engage in a little "nanoimagination" with me, I think you'll see why.

GE's focus on nanotechnology
GE has publicly defined nanotechnology as the "ultimate material science," and in 2004, CEO Jeffrey Immelt was quoted as saying, "It's natural for us to begin to work on nanotechnology because, in essence, that is going to be the next generation of material science." Indeed it is, and the company is already busily pushing the development of a variety of nanotechnology-related advancements.

Last year, researchers at its world-class Global Research Center developed the world's best-performing diode from carbon nanotubes. And just yesterday, company officials announced that they created the "ideal" carbon nanotube -- one that operates at the best possible performance levels. The advance could very well usher in a new era in electronics and communications by making electronic devices even smaller and faster -- and make GE a formidable player in both fields.

Another application of the technology is next-generation advanced sensors. Sensors employing the carbon nanotube diodes could have unsurpassed levels of sensitivity and thus be very effective at detecting chemical and biological threats. The devices could also be incorporated into other new materials and lead to "smart skin" for advanced aircraft that would use the carbon nanotubes as tiny actuators to help planes modify their shape in response to changes in aerodynamics.

More near-term, stronger and lighter nanomaterials could be used to revamp and bolster GE Aviation Services' fleet of 1,600 aircraft. These advances could pit it against Lockheed Martin (NYSE:LMT), which is already partnering with NanoSonic, a small Virginia-based nanotech start-up, manufacturing nanocoatings and nanomaterials -- including something called "metal rubber."

A team of 50 GE scientists are also working on creating the next-generation super materials. These wonder materials may be able to do everything from helping microprocessors cool faster, to instilling new properties in plastics, and allowing jet engines to last longer and fly further on less fuel.

As exciting as these applications are, what I really like about GE is its ability to think big -- and think differently. The first area in which the company is applying these traits is energy, specifically "green" energy.

GE's green imagination
While it is true the company's "Ecomagination" initiative launched earlier this year stokes my more liberal "tree-hugger" sensitivities, it is the management's hard-headed, practical emphasis on market realities that make "clean energy" a viable strategy for improving the company's bottom line. And this is what ultimately appeals to my fiscally conservative tendencies.

Skyrocketing energy prices, growing concerns over greenhouse gas emission, and global climate change, as well as China and India's growing -- and nearly insatiable -- demand for energy, are all working in concert to create a massive economic opportunity for companies that can develop new, clean, and sustainable sources of energy.

On nearly every "clean energy technology" front, GE is racing to develop new alternatives -- and nanotechnology is well-positioned to help with every application.

For instance, nanoscale catalysts and nanofilters offer great promise in the creation of "clean coal" technology. New nanoscale materials will lead to both longer-lasting and more efficient wind turbines, as well as to more conductive ceramics that will facilitate the transmission of electrons across the transmission grid.

New nanomaterials will also yield better fuel cell membranes and move the much-heralded "Hydrogen Economy" one step closer to reality by yielding a more practical electrical-chemical conversion process.

Even solar cell technology is undergoing a radical transformation because of nanotechnology. The "ideal" carbon nanotube diode revealed yesterday may also possess unique photovoltaic (converting light into energy) capabilities that will make solar cells a more viable alternative in the energy market. Additionally, nanoparticles are now being combined with polymers to create flexible solar cells, and the efficiency of those cells is being dramatically improved by scientists' enhanced understanding of how photons can be harvested more efficiently through nanoparticles and quantum dots.

Opportunities in water and health care
The second "big" opportunity is water -- estimated to be a $400 billion annual business. Desalination is one possible option for increasing the world's water supply but, at the present time, it remains underutilized because of its high operating costs. If GE can develop new nanomaterials and/or a new nanofiltration process, the economics could change and allow the company to snag a much larger share of this lucrative market.

GE is also on the forefront of a third big trend: health care. Here again, GE's nanotechnology research and development is already yielding significant advances -- everything from new contrast agents for better MRIs to the creation of nanosensors that can detect cancer and other diseases at a very early stage.

GE's R&D should pay off
The final reason I am so enamored of GE and its long-term prospects relates to its R&D and its global presence. The company is currently investing more than $5 billion in emerging technology (with more than $1 billion alone in clean energy) and has dedicated nearly 2,000 scientists to finding new technological solutions to its customers' problems. This suggests that the company has not strayed from the advice of its founder, Thomas Edison, who said the key to success was to identify the world's problems and then find solutions to those problems.

Many of these researchers are located at GE's campuses in China and India. This is as it should be. Not only are these locations where much of today's global scientific talent resides, but they are also where the greatest problems -- and growth opportunities -- lie.

In the next three years, China alone is expected to invest $300 billion in its infrastructure to prepare for the 2008 Olympics. Much of this investment will be directed to energy needs, security, and transportation. GE is a major player in all of these areas.

When you couple these numbers with the 2 billion people in China and India who will continue to demand better access to better health care, it doesn't take even a small imagination -- let alone a "nanoimagination" -- to understand how GE still has the potential to bring a lot more good things to life. Not the least of which may be sustained double-digit growth for the foreseeable future. The patient, long-term investor could be well-rewarded.

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Fool contributor Jack Uldrich has been accused by teachers and friends alike of thinking small since grade school. He is the author of The Next Big Thing Is Really Small: How Nanotechnology Will Change the Future of Your Business. He owns shares of GE, IBM, and 3M. The Fool has a disclosure policy.